If you’re looking to invest in Canada’s stock market through a low-cost index ETF, two names come up instantly: XIU and XIC — both issued by iShares (BlackRock). They track different indices, carry different fee structures, and appeal to slightly different types of investors. This guide gives you a complete, up-to-date comparison so you can decide which one belongs in your portfolio.
Quick Comparison: XIU vs XIC (2026)
| XIU | XIC | |
|---|---|---|
| Full name | iShares S&P/TSX 60 Index ETF | iShares Core S&P/TSX Capped Composite Index ETF |
| Index tracked | S&P/TSX 60 | S&P/TSX Capped Composite |
| # of holdings | 60 | ~240 |
| MER | 0.18% | 0.06% |
| AUM | ~$20.6B CAD | ~$12B CAD |
| Inception | September 1999 | February 2001 |
| Dividend yield | ~2.9% | ~1.8% |
| Dividend frequency | Quarterly | Quarterly |
| 1-year return | ~33.3% | ~37.5% |
| 10-year annualized | ~13.9% | ~13.9% |
What is an Index ETF?
An Exchange Traded Fund (ETF) is a type of investment fund traded on stock exchanges just like individual stocks. Index ETFs — the first kind of ETF introduced to North American markets — aim to replicate the performance of a specific market index by holding all or most of the securities within it. Their core appeal: broad diversification at very low cost, without active management decisions that often underperform the market over time.
Do Index ETFs Pay Dividends?
Yes. Since XIU and XIC hold shares of dividend-paying Canadian companies, those dividends flow through to ETF unitholders on a quarterly basis. XIC pays dividends quarterly — the last distribution in January 2026 was $0.28 per unit, with a current yield of approximately 1.80%. XIU’s dividend yield runs slightly higher at around 2.9%, reflecting the heavier weighting of Canadian banks in a tighter portfolio.
The Indices: What’s the Difference?
S&P/TSX Capped Composite Index (XIC)
This is the broadest measure of the Canadian equity market. It includes over 200 of the top-ranked Canadian stocks by market capitalization, representing approximately 95% of the entire Canadian equity market. Individual positions are capped at 10% to prevent any single stock from dominating the index. XIC holds 240 large-, mid-, and small-cap stocks — the same top 10 holdings as XIU, but with over 180 additional small and mid-cap companies that XIU excludes.
S&P/TSX 60 Index (XIU)
This index comprises the 60 largest companies listed on the TSX by market capitalization, offering concentrated exposure to Canada’s biggest, most liquid corporations. XIU originally traces its history to the first ETF in the world — the Toronto 35 Index Participation Fund launched in March 1990. It has since grown into Canada’s largest ETF by assets.
XIU vs XIC: Key Metrics Compared
1. Management Fees (MER)
This is the starkest difference between the two funds. XIU has an MER of 0.18% compared to XIC at 0.06% — a difference of around $14 per year on a $10,000 portfolio, which compounds significantly as your portfolio grows.
On a $500,000 portfolio, that gap becomes $600/year in fees — money that stays in your pocket with XIC. The clear winner on cost is XIC.
2. Assets Under Management (AUM)
XIU’s assets under management stand at approximately $20.56 billion CAD, making it the largest ETF in Canada. XIC has approximately $10–12 billion in AUM. Both are more than large enough to ensure excellent liquidity, tight bid-ask spreads, and no risk of closure.
3. Performance
This is where many investors are surprised. Despite XIU’s higher fees, both ETFs have delivered nearly identical 10-year annualized returns — XIU at approximately 13.94% and XIC at 13.92%. Over the very long term, the broader diversification of XIC doesn’t significantly alter outcomes because the small and mid-caps it adds represent a small fraction of total weight.
In the past year specifically, XIU delivered a total return of approximately 33.3% including dividends. XIC’s yearly performance shows a 37.45% increase — giving XIC the edge in the most recent period, driven partly by the strong 2025 performance of Canadian financials and materials companies.
4. Diversification
XIC is still concentrated in the financials and energy sectors, but there is a more balanced allocation to other sectors — including materials, industrials, technology, utilities, and telecoms — as a result of its small and mid-cap holdings. The proportion of small and mid-caps is still small, but does introduce additional volatility compared to XIU.
XIU sector breakdown (2026):
| Sector | Weight |
|---|---|
| Financial Services | 37.1% |
| Energy | 17.2% |
| Basic Materials | 16.5% |
| Industrials | 8.1% |
| Technology | 8.4% |
| Consumer Cyclical | 4.1% |
| Consumer Defensive | 3.5% |
| Utilities | 2.7% |
| Communication Services | 2.2% |
| Real Estate | 0.2% |
5. Volatility
Both ETFs carry similar risk profiles given their overlapping top holdings. The correlation between XIC and XIU is 0.96 — extremely high, meaning they move almost in lockstep. XIC’s beta is marginally higher due to its small and mid-cap exposure, but the practical difference for most buy-and-hold investors is negligible.
6. Liquidity
XIU is the more liquid of the two — both in terms of the underlying holdings (60 of Canada’s largest companies) and trading volume on the TSX. That said, XIC’s liquidity is also excellent given its $12B+ in assets. Neither fund presents any liquidity concerns for retail investors.
Taxation Considerations
Both XIC and XIU distribute Canadian eligible dividends quarterly, which qualify for the dividend tax credit — making them more tax-efficient in non-registered accounts than interest income or foreign dividends.
If you want to avoid all distributions entirely for maximum tax deferral in a non-registered account, consider HXT from Global X. HXT replicates the S&P/TSX 60 Index (same as XIU) but is structured to defer all income distributions, meaning no dividend payments and no immediate tax liability — with a substantially lower MER of 0.03%.
Account type guidance:
- TFSA: Either XIU or XIC — distributions are tax-free regardless
- RRSP: Either — distributions are tax-sheltered until withdrawal
- Non-registered: Consider HXT for tax deferral, or XIC/XIU if you prefer regular quarterly income
Alternatives to XIU and XIC
If you’re comparing beyond just these two iShares options, two other Canadian broad market ETFs are worth knowing:
ZCN (BMO S&P/TSX Capped Composite Index ETF) — essentially the same exposure as XIC but from BMO, with a similarly low MER of 0.06%. A direct swap for XIC if you prefer BMO as a provider.
VCN (Vanguard FTSE Canada All Cap Index ETF) — Vanguard’s Canadian market ETF, with an MER of 0.05%, holding over 180 Canadian stocks including small caps. Slightly cheaper than XIC, comparable diversification.
XIU vs XIC: Which One Should You Choose?
Choose XIU if:
- You want maximum liquidity and Canada’s most established ETF
- You prefer a tighter, large-cap-only portfolio with slightly higher dividend yield
- You are comfortable paying 0.18% for the simplicity of the S&P/TSX 60
Choose XIC if:
- You want the lowest possible cost (0.06% MER)
- You prefer slightly broader exposure including mid and small caps
- You want to minimize fees compounding against you over decades
Our take: For most long-term Canadian investors, XIC is the better choice — broader diversification at a fraction of the cost. That said, XIU is an excellent fund and you truly can’t go wrong with either one. The 10-year returns are virtually identical, which means the fee difference is the clearest differentiator over time.
How to Buy XIU or XIC
Buying either ETF is identical to buying a stock. Log into your online brokerage account (Questrade, Wealthsimple Trade, CIBC Investor’s Edge, TD Direct Investing, etc.), search for the ticker symbol XIU.TO or XIC.TO, and place your order. Both trade on the Toronto Stock Exchange in Canadian dollars with no currency conversion required.
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Disclaimer: This article is for informational purposes only and does not constitute investment advice. Performance data sourced from Yahoo Finance and PortfoliosLab as of March 2026. Always verify current data with the fund provider before investing.
